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Ralph Klein has gone and it is time to retire Ralph's World. Thanks to all of you who have supported this venture by contributing material and through your comments. It has been fun.

Should we get another blog underway? Let me know your thoughts by e-mailing me at johnnyslow@gmail.com.

John Slow
January 1, 2007

Thursday, November 10, 2005

Is the THIRD WAY a good idea?

Consider these key questions…

Premier Klein has talked about his THIRD WAY for some time but has avoided any specific explanation of what he means.

The specifics of what the THIRD WAY may mean emerged from the Request for Proposals (RFP) that the Alberta government recently sent out to the insurance industry.

This RFP is alarming and raise a number of important questions.

Why is the Alberta government inviting the insurance industry to re-design our health care system?The stated objectives of the RFP are:

"To explore alternative financing models for health services" and

"To create conceptual models for health services insurance; and provide economic and actuarial analyses of the new models."

There is nothing in the RFP that limits the scope to non-emergency services. The RFP reveals that the real purpose is to transfer some of the costs of providing universal & comprehensive coverage for medically necessary services from government to the people who require those services. Insurance corporations have been provided with reams of confidential and valuable information on how our system currently operates. They have been asked to outline what should be covered, who should be covered and at what cost.

The big problem is that the private insurance industry is not in the business of providing universal, comprehensive and accessible healthcare coverage. Their business is providing limited and often partial coverage to selected individuals or groups for specified risks. They don’t compete to reduce costs or to be more efficient but rather to avoid risk. Job One for these companies is maximizing profit for their shareholders.

Will private insurance reduce healthcare costs?While the government’s share of healthcare costs may go down, the total cost of healthcare services will increase for several reasons:

a) The inevitable bureaucracy of a multi-payer system. Legions of bean counters will be required to track every service and box of tissue so that it can be billed to the appropriate insurer.

b) Private insurance companies have to set premiums not only to cover costs and profit, but also to build in a cushion for risk. The result is the situation that exists in the USA where the growing cost of health care premiums has brought companies like General Motors to the brink of bankruptcy, and fifty million Americans find that they are either ineligible for healthcare coverage or can’t afford the premiums.

Will wait lists get shorter?No, because those on wait lists all have a pre-existing condition. Under standard insurance industry practice, they will either be ineligible for coverage or, if they are part of a group plan, will face a long wait period before coverage kicks in.

Wait lists will also get much longer for those who don’t have or can’t afford the coverage required to jump the queue.

Will private insurance increase choice?For the answer to this, look again to the United States where everyone except the aged and the indigent has to rely on private insurance.

Those who do have insurance soon discover that “He who pays the piper calls the tune.” They find themselves told by their insurance provider what procedures they may have and where they must have those procedures.

Who will be hardest hit by private insurance?The people hardest hit by a move to private healthcare insurance will be 50% of Albertans who don’t have access to employer subsidized group plans. This will include farmers, small independent businesses, senior citizens and the poor.

The adverse effects will also be most severe on those who make most use of the healthcare system: infants up to one year of age, women in their child-bearing years, and seniors.

The resource and manufacturing sector will also lose the competitive advantage that they now enjoy over their American counterparts because of the much lower costs of Canada’s public healthcare system.

Can we try it and abandon it if it doesn’t work?The Canada Health Act (CHA) set up a public healthcare insurance plan that, as a purely public service, is shielded from private competition under the terms of the North American Free Trade Agreement (NAFTA).

However, under the terms of NAFTA, if even one Canadian private insurance company is allowed to move into the area of medically necessary services covered under the CHA, there is no way of stopping HMOs or other healthcare insurance companies from the USA or Mexico from moving into Canada. If we try to stop them, all these prospective competitors may sue Canada for loss of potential profits. It is rather like scrambling an egg: easy to do but impossible to undo.

What is driving the push for the THIRD WAY?The THIRD WAY mix of public and private insurance and delivery of healthcare is certainly not in the public interest. At best, it is driven by ideology rather than reason: at worst, it is driven by greed.

The latter concern was heightened when the result of the RFP was announced. The government awarded Aon Canada a $1.5-million contract to develop an Alberta model for private healthcare insurance.

Aon Consulting of Canada faces six charges filed by the Ontario Financial Services Commission. Its American parent company, the second largest insurance brokerage in the USA, has been forced to pay out $190-million US to settle anti-competitive practice and fraud allegations brought on behalf of clients in three states.

Is this who we want re-designing our healthcare system?No.

Get on the phone to Iris Evans and Ralph Klein and let them know what you think.Premier Klein’s Office ( 427-2251)Hon. Iris Evans: ( 427-3665)Toll Free connections to Alberta Government can be made through: 310-0000.